Equitable victims' anger as they could only get £400m redress
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Equitable Life victims are outraged at news that they may only get £400m-500m compensation - one-tenth of the sum they say is due.
The Equitable Members’ Action Group attacked the report published last week by Sir John Chadwick, a retired judge appointed by the former Labour Government to assess the extent of compensation due to policyholders. Payments are due to begin in 2011.
Emag says Chadwick’s calculation that relative losses of between £4bn and £4.8bn should be reduced to final losses of £400m-£500m because some investors would have continued to put money into the firm even if they knew its true financial state is “utterly risible”.
The group say the coalition Government allowed the Chadwick process to go ahead against “obsolete and entirely inappropriate terms of reference” taken from the Labour Government.
Emag general secretary Paul Braithwaite says: “That Sir John puts his finger in the wind and says we should not get more than 25 per cent of ’aggregated external relative loss’ (whatever that means) because we would all have continued to heap in our retirement savings in even if we had known the true state of Equitable Life is utterly risible.
“Chadwick’s report should never have been allowed to take centre stage after the coalition made a commitment to fair treatment.
“The coalition promised us swift, transparent and fair - one out of three is not good enough. Today’s treatment was not fair, nor is the implementation proposed swift.”
Hargreaves Lansdown pensions analyst Laith Khalaf says: “Equitable investors are probably now expecting the worst without bothering to hope for the best. It will be welcome news that the compensation scheme is finally being set up but the amount of compensation paid looks likely to disappoint.”
The Government has also set up an independent commission to advise on the best way of allocating compensation to Equitable Life victims. It has appoin-ted Brian Pomeroy, John Tattersall and John Howard to form the commission.
Pomeroy is chairman of the Treasury’s Financial Inclusion Taskforce and member of the Financial Reporting Review Panel.
Tattersall is former chair of the Financial Services Regulatory Practice and a senior client relationship partner at Price-waterhouseCoopers LLP.
Howard is a former chair of the FSA’s consumer panel and was a member of the Mortgage Code Compliance Board, until its activities were taken over by the FSA in November 2004. He is also a non-executive director of the Financial Ombudsman Service.
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